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5 key takeaways from MIPIM 2016

Heritage Group has recently returned from this year’s MIPIM conference held in Cannes and host to 21,400 delegates. The event proved a great success once again, with the Heritage stand attracting a broad spectrum of real estate and investment professionals, allowing our team to build new relationships and meet existing contacts.

As the world’s leading real estate event, MIPIM draws some of the most influential industry figures and businesses. Client Solutions director, Mariana Enevoldsen, shares the most important news and views from the event impacting property funds and the wider real estate market:

Cautiously optimistic – the mood amongst representatives at this year’s event revealed a mixed outlook for global real estate. Volatility both in the oil price and markets more broadly has prompted caution amongst real estate investors, with some citing a ‘stick to what you know’ approach that is focussed on traditional sectors. Meanwhile by contrast, others are looking to fresh opportunities in alternative assets including student housing and healthcare. A report by property consultants Cushman and Wakefield released at MIPIM also went one step further to argue that uncertainty around the global economy would actually help boost asset allocations to the real estate sector.

Brexit – the main consensus amongst the real estate sector appears to be that the UK would be better off remaining as part of the EU. Chairman of the City of London Policy and Resources Committee Mark Boleat, who spoke at MIPIM, highlighted that many concerns about the EU are actually based on misinformation, naming the perception that red tape around property-planning is instigated by Brussels as just one example of this. The political uncertainty sparked by the prospect of a Brexit also led to the view in certain camps that there was little point in making investment decisions until the outcome of the referendum is known.

All eyes on London – Opportunities abound in the UK capital, with a range of experts citing the continued growth of London’s prime and super-prime market. A London-based architect stressed that despite the volume of developments already taking place, space is not an issue when it comes to building in and around the capital, indicating an attractive outlook for both investors and developers.

Europe and beyond – Interest in alternative assets in the European market is growing, with a quarter of all real estate investment activity in the region involving alternative assets during 2015, according to Savills. Close to 50% of total investment activity around alternative assets took place in the UK market over the period. Over in Asia, the outlook for investment in the real estate market continues to be strong, driven by the region’s steady economic growth and broad trends such as urbanisation and expanding middle class population.

Interest in private rental sector grows – There are clear signs that the UK private rental sector (PRS) is maturing, with one leading fund manager at MIPIM declaring it offers the most attractive returns for investors as any real estate asset for a generation. Another property expert pointed out that UK PRS is following the lead of the US market. The US market continues to provide exciting PRS opportunities in specific areas of the country. Heritage is currently working with a manager who is seeking to create a PRS investment fund with attractive yields for investors. The increasing interest in PRS back here in the UK is an exciting prospect too and one that we will be monitoring closely going forward.

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